Status Update

Oct 12, 2021

Thank you very much. Hello, everyone. I am CSO of Mitsubishi Heavy Industries. My name is Kaguchi. Thank you very much for joining us at this briefing on CCUS. Last October, we announced 2021 medium term business plan. And in that, in one of the growth area, energy transition was included, and we are working on that. Now in energy transition, there are 3 pillars. 1st is the decarbonization of the existing infrastructure. The next is realization of the hydrogen ecosystem. And the third is realization of CO2 ecosystem. Concerning the 2nd pillar last June last year, we have made the similar briefing session. And this time, this is the 2nd briefing session that we are having in realizing the CO2 ecosystem. So CO2 related businesses and actual initiatives are the ones that we would like to introduce to you. Concerning CCUS, especially in Europe and also North America, there are strong interest in this area. So we are very much focused in this. So I hope you would understand this. So now more specifically, Sasaki will give you the presentation. Thank you. This is Sasaki speaking. So I'd like to talk about the CCUS that we are working on at MHI. Today, as you can see here, we have Section 1 and Section 2. In Section 1, we'd like to talk about expectations for CCUS. So how do you look at the carbon neutrality? And I'd like to share with you our view and what are the challenges and what kind of business that we are going to develop. So those are the ones that I would explain first. And in Section 2, I would like to talk about our view of CCUS and what we are thinking about in terms of our business. First, the slide that you are looking at right now is the annual CO2 capture amount to achieve carbon neutrality. These days in 2,050, we are trying to achieve the carbon neutrality and we hear those key words very often. On the right hand side, we have graphs. And in 2021, the how much CO2 is emitted right now. So 40,000,000,000 tons of anthropogenic CO2 is being emitted. And as for the CO2 capture, it is currently 14,000,000 tons. It's very limited. So it's not balanced at all. The CO2 emission keeps increasing. In 2,050, we are trying to achieve the carbon neutrality. And what would happen then is shown here. Now the human CO2 emission is 4,300,000,000 yen to 13,000,000,000 yen. It's a wide range, but this is the volume of emissions that we need to reduce to. And 4,300,000,000 to 13,000,000,000 tons, we through the CO2 capture, if we can strike a good balance, then we'll be able to achieve the carbon neutrality. So the CO2 capture, the breakdown is shown in a pie chart, industrial fuels, fuel production, power generation and others. So as of now, the percentage or the structure will very much change. And unless we achieve this type of balance, we will not be able to achieve the carbon neutrality. So for that purpose, we believe CCUS is very important. And this is the area that we need to work on. Now on this slide, now the separation and the capturing of the CO2, what is the global market right now? The METI, Japan's Ministry of Economy, Trade and Industry has a roadmap to be on 0 carbon. According to this, in 2030, about 6,000,000,000,000 yen is the size of the market. In 2025, it is about 12,000,000,000,000 yen So the growth is expected. We don't know whether the growth would be exactly what we expect right now, but the global warming and the preventing of it and to protect the environment, we need to also make the social contributions. And in order to achieve all of those, this is the amount of the CO2 capture that we need to achieve. Now from our perspective, the CCUS, what are the challenges that we see right now? This is the simplified summary of that. The horizontal axis shows the CCT U. S, the range is shown with the scope. From the left, we have a carbon capture and T transportation and U for utilization and S for storage. And if we may categorize the challenges, the system issues and scaling issues and technical issues, there are 3 major categories of the issues and challenges. Now the CO2 capture concerning that, first of all, the CO2 emission reduction measures and the carbon taxes and carbon pricing balance among those is important. And that is one of the system issues. In terms of scale, I think this is the most important one. There is only limited place to take CO2 after capturing. So unless we make the improvement, even if we capture CO2, there is no place to take the capture CO2 too. And with the slow deployment, there is a cost issue as well to store and capture. And as for the technical issues, the lack of the practical capture technology is one thing and that needs to be the commercial use and application needs to be expanded. Now when we applied the capture technologies, so for example, the exhaust fuel, for example, we need to work on the further technological development so that we can capture the post combustion CO2. In terms of the transportation, the range of the responsibility of the transporter is not very clear. And until now, the large amount of the CO2 were not transported. So there's lack of clarity in terms of the systems. Now looking at the scaling issue, the transportation and transportation capacity are limited because we have not done this until now. So it's still costly and it's simply not done. As for the technical issues, there are no large volume marine transport technology. When we say marine transport, we would be using the ships or vessels and the tanks to be used and the technological development has not been completed. So how can we accelerate the development of the technology is another issue. As for the EU utilization in terms of the system issues, the green premium is limited and is not directly linked to CO2 fixation or sequestration. So it's not really functioning economically. And also scaling issue, the end product is not new and it's just mainly the replacement for the traditional product. So that is another issue. And no practical utilization technologies, lack of options. So there are a lot of issues like this. So in utilization, we need the hydrogen on the other side. So using CO2 and the hydrogen, how do you make it economical? That is another challenge that we are faced with. The final is the storage. Now system issue, as you can see, is that the monitoring, the assessment conditions for the environmental aspect is not yet in place. The storage is not something that is widely done. So this is something very new. So that's one of the challenges. And in the area of the scaling, the number of the practical reservoir is limited and also the amount is limited. And also the cost is high because of the remote area that is for the storage location and also deep underground. And also the technical issue is the low maturity of the monitoring technology. So CCUS as an idea, this is very often talked about, but there are many issues and challenges in systems scaling as well as technical area. Now based on what I talked about, what about the status of the CO2 storage in the world? This is the brief summary. The map on the right, I am not going to explain the details, but on the left, there is a summary. So concerning the CCS, the development plans are currently going on mainly in the Americas and Europe, and that is a fact. And the scale of the storage is about 1,000,000 to 35,000,000 tons per year. And what needs to be done is actually 4,300,000,000 to 13,000,000,000 tons. So there is a big gap there. And we will have more and more storage sites and locations, which will be developed in the near future. According to the IEA, the world where storage potential is quite sufficient. So how can we make it economical and safe, so we can have a storage location as well as the storage technology? I think those could be our challenges. So I have talked about general matters about CCUS and then we would like to move on to what we have in mind for CCUS Business. CCUS, T is not included here, but towards the area of CCUS, we have defined 3 frameworks. These three frameworks are contained capturing CO2 recovery and capture to pave the way towards solution. And next is connect. And by connecting, ecosystem be created so that economic viability can be in place. And we believe storage, they contain, connect, convert, that is capture transportation, utilization and storage. They are very important. And last is convert, utilization through conversion of CO2. And in order to accelerate carbon neutrality, contain, connect, convert, those initiatives should be in place and that is our concept at MHI. First of all, I would like to talk about contain and CO2 capture from different sources of emission, we are trying to capture and recover CO2. And there is a technology for a capture and we do have such technology. So this KMCDR process is going to be the core technology in this area. So, that is the main capability in the area of a contained. And next, I would like to talk about our initiative in other areas. And I would like to introduce to you customers' voices as well. Now, KM CDR process, this was developed by MHI and this is absorption technology for absorbing emission from different low gas. And this is a chemical absorption technology. We have the experience of developing this technology over the past 30 years. And on the accumulation of our effort, we have presence in CO2 capture using this technology. So, we have track record in this technology, which is our strength. And technology to capture CO2, CO2, there are different technologies and they're summarized in the right hand side. 1 is chemical absorption. This is to absorb CO2 using chemical substance. And the second is solid adsorption. And thirdly, membrane separation. Mainly, there are 3 types of technology. We have KMCDR process that is chemical absorption method. And the feature of this technology is that CO2 is dissolved in a liquid and separated. And relatively speaking, it is easy to upgrade the scale and the development status. We have a track record of commercialization Already, development of absorption solution has been done. And going forward, we have to meet the requirement from the market through cost reduction of equipment. And we made entrance into the market with the technology, but other players such as Shell, Afloor, Acura, Toshiba are entering into this market with their own technology. And about solid absorption and on the surface of the solid, CO2 is going to be absorbed. Air liquid, that's Bante, the CO2 solution. There are different players and they have their own unique features. Relatively speaking, there is a tendency that for a certain of low gas may be effective for capture using this technology, but the type of blue gas may be limited. And the third is membrane separation. The area of application may be quite limited according to our perspective. So these are the 3 categories of technology. Then KMCDR, the applied plant diagram is shown on the slide. And roughly speaking, there are 3 towers in this diagram, the cooling tower, absorption tower and regeneration tower. So it consists of 3 towers. Emission gas comes into the cooling tower from the bottom, it's just from stack. And the gas temperature will be cooled down to 40 degrees. Then gas will be elevated towards the top of absorption tower. And Ammon's absorption liquid will be dispersed from the top. KS21, KS1, such absorbent is used. And then it comes down to the bottom of the tower. And together with absorbent liquid, from the bottom of the absorption tower, the liquid will be pumped up to the regeneration tower. And CO2 will be discharged. And from the top of regeneration tower, it's discharged for capture. And inside absorption tower, CO2, after being cooled down, there is a part where amine is injected. There is a diagram of a pump here. Once again, the liquid is washed. And from the top of the tower, as a CO to free air from the top of regeneration tower, CO2 will go out. Other players use a similar mechanism, But there are know hows which cannot be disclosed and other small features which are unique to their company. And actually, there are many mechanisms that we have as a know how on top of such schematic diagram. And customers are not looking at pilot tests, rather they're looking at commercial track record. So they're looking at commercial operations going forward. And these are the voices of our customers. And this is a summary of that. I hope you would read it at your leisure. And we have experience of commercial operation and capture capacity of approximately 200 to 5000 tons a day in total of 13 plants. And the customers are evaluating our track record quite highly. They rely on us and we believe it is important to expand such customer base. So on this slide, this is a little different perspective. Now the capturing CO2 from the exhaust gas. 5 years ago, we were thinking how to capture the gas from coal fired power generation. It was very simple image. But now we have to be omnidirectional. We have to think about the various industry fields. So what would be the size and what are the obstacles? So here we need to really organize and summarize all of those. And we try to do it and described in this graph. The horizontal axis is the size from small to large, that is the CO2 capturing facility equipments. And the vertical axis is the difficulty of capturing CO2 from exhaust gas. The bottom is normal and the top is more difficult or higher difficulty. So when you see the blue lines, shipping steel and cement, we are having the feasibility studies and also the verifications. And based on our track record, we do not have a lot of track record in this area. So we really need to work on increasing the experiences through the verifications and experiments and so forth. Now as for the green line, this is where we already have the track record. So based on our experiences, we can actually apply. So for example, coal fired power generation and biomass and others. So those are the areas that we have a good coverage. The orange part is at development stage. So we still do not have a lot of experiences here. So in terms of capacity, the scale is smaller. So if we do the pre processing well, maybe we can expand this. So that's what we are trying to do right now. So through our efforts, we want to expand the application so that we can expand our portfolio in the future. Now on this slide, those are the things that we are actually doing right now. From the top, the coal and gas power generation, world largest CO2 capture plant, for example, the Petro Nova in Texas in the United States, 5,000 tons and so forth. And biomass, so 8,000,000,000,000 tons per year. This is still in the planning stage. This is U. K. Company Drax and we have gotten agreement there. As for the LNG liquefaction, next decade is an example. This is to contribute to the low carbon production of LNG production. And Lihei Cement, we're having the feasibility study in the field with high technical difficulty. As for steel, this is a difficult area. So this is something that we will be doing and we have started to work on this. And as for shipping, we have released made the press release. This is a word first verification of onboard CO2 capture. It's a very small scale, but we are trying to get the feedback from this right now. As for the waste incineration and the gas engines and small boilers, we would make this into more modular system, and we are currently developing this system. So in all of those areas, CO2 in the area of the CO2 capture, we are one of the leading company. And as a top runner, we would like to offer a wide range of technologies. Now we would like to show you a video clip of the major biomass player drugs. We have Mr. Will Gardner. It's a short video to share with you. We chose MHI as our partner to deliver BECCS because they are a world leader in carbon capture technology. There were over 13 projects ongoing using carbon capture technology globally, including some of the largest ones, which are capturing over 1,000,000 tonnes a year. Our project is aiming to capture 4,000,000 tonnes across 2 units, so 8,000,000 tonnes in total. So we think they have the experience and the technology to be a great partner for us. In addition, we've worked with MHI across the years, both in our biomass power station, but also trialing their CCS technology at Drax. And we know that they work in a very collaborative way and think they will be a good partner for us to work with. So that was CEO of Drax. Next is about Connect. Let me briefly explain this. Now this framework connecting the CCUS so that we can build a better economical economically viable solutions. So maybe we don't have to do this, but I think this is a very important area. So by making efforts, I think we can reinvigorate the overall supply chain. So this is another area that we would like to work very hard in. Now those are the major components of the CCUS value chain. On the right, we have a sketch. The left is the emission or emitter. And then we have capture, the capture operator. And then we do the liquefaction. And then we will put it in the tank and transport it in the carrier. And then on the other side, after the delivery, we would unload and then compress for the storage or for the conversion or utilization. This is the overall image of the CCUS value chain. And so say that this is a total picture. And what MHI can cover right now, what is the range of it? From the left, the capture of the CO2, which I talked about until now. And then CO2 liquefaction, yes, partly we do that. And transportation by the carrier, the large CO2 carrier, this is something that we are developing right now. And CO2 tanks and CO2 compressors. And for the utilization, we have our fertilizer plant, for example, we already have the track record there. So there are many areas that we can make contributions. Now when you look at the CCUS value chain or businesses, it is still at the beginning. So the CO2 capture, transportation and storage or conversion, utilization, it is very much segmented business. It's just 1 to 1 business until now. That is the current status. So in the future, for example, in U. K, hub and cluster type will develop, so that as a CCUS business to do everything as a whole will emerge. So MHI supplying the individual technologies and products are something that we would do, of course, But we like to force that CCUS Industries and we want to do many things. I would explain this later that is the digital platform, for example, called Connex, so that we can start up the market quickly and so reduce the GHGs and we want to make a contribution in that area. Now Connex, I touched upon this. This is to visualize it's a platform to visualize CO2 distribution. This may we announced made the announcement together with IBM about the concept. So real world and the digital world, in both of them we want to visualize the CO2. And so we'd like to add value to this emitted or harmful CO2. So together with IBM, we are trying to think about various things. On the left, as you see, right now, some companies are working together with us so that we can start the demonstrations in Japan and overseas. This effort has just started, but I think this concept has a lot of potential. So it's a platform. So that's something that we like to do from now on. So this is a global overview, which can be realized by K'NEX. As is mentioned on the left hand side, Konnex uses smart meter. It visualizes actual CCUS in cyberspace using blockchain technology and IoT connected smart meters. So certificates and evidence, testimonials can be offered in different stages. In building the platform, CO2 trading has to be visualized. As was mentioned earlier, using smart meters and IoT, using blockchain technology, visualization of the trading should be done, so that information can be offered to different businesses as well as investors. So who is making how much effort that can be visualized in the system. And also on top of that, not just evidence, but also the actual trading, that is to say, the suppliers and consumers can be matched. And we hope that as such, expansion will be realized using this platform. There are many things that have to be realized before reaching our objectives, but this is the initiative that we are working on. And I would like to introduce to you Mr. Yamaguchi of IBM Japan. We have received a video message from him. Last year, Mitsubishi Heavy Industry decided to make energy transition as one of the pillars in its strategy. We have been working on energy issues for many years and we had strong desire to give contribution to the realization of this concept. So we decided to work together in compiling the concept. As a result of the conceptualization, responding to high expectation, KONEX was born, integrating MHI's physical infrastructure and the digital network built by IBM. This is a digital platform that visualizes the entire value chain covering CO2 capture to recycling on real time basis. It will create a new market for CO2 and accelerate the realization of carbon neutrality, while taking advantage of our experience in collaboration with global customers in IBM Blockchain, Hybrid Cloud, AI and our insight as a consultant coping with digital transformation, we will promote building the architecture of Connects together with MHI. Lastly, digital society cannot be realized by a single entity. It is indispensable that multi businesses form consortium going beyond the boundaries of industries for collaboration. Connects is an initiative that promotes collaboration beyond the boundaries of enterprises and business sectors. We're determined to build a platform with MHI so that many companies can participate. We will aim for realization of carbon neutrality and acceleration of the industrial growth. Next, I'd like to talk about convert, the possibilities for CO2 utilization in NCCU. We would like to introduce to you our initiatives and options of utilization of CO2. Captured CO2 will be subject to conversion and utilization. And this diagram shows the flow, the path of conversion and the path towards direct use. The synthetic fuels, chemicals, building materials, these are the application area for CO2 conversion. And as for direct use of CO2, it can be used for greenhouses or manufacturing of solvents, heat transfer fluids and use of CO2 for refrigeration, supercritical power systems. This is considered. And on top of the experience of CO2 conversion in the area of synthetic fuels and chemicals, unfortunately, we have not gone to the stage where convert can be well discussed much yet. And we do not stick to the idea of doing everything on our own. As was mentioned by Mr. Yamaguchi of IBM, it is necessary to enter into partnership with different businesses to expand the activity. So, we are making investment in startups for such purpose. And various concentration is given on CO2 utilization. We will make every effort to enrich our portfolio. We shouldn't be standing on too long perspective. We would like to think of the utilization of CO2 in a different application. And our business initiatives in CECU from the source of emission, CO2 is captured. And for conversion and for utilization, we will go through the path. And this is a plant factory for direct use of CO2. And based upon CO2 capture, we are trying to meet the needs of the customers in the local area. Carbon neutrality is our target by improving all those technologies. And we should not stick to a certain technology alone. We believe that we should focus on matching between ourselves and the needs of the customers. And we'd like to expand the menu of the use of captured CO2. And towards realization of what I have been mentioning, this is the timeline. The top part is SCC US Technology Service Development and the lower part shows business model. The light blue shows the proof of concept stage and the gray part shows the commercialization stage. The top KS I CO2 capture plant already we have experience and we have track record. So this is an existing business already happening. And KS21 CO2 capture plant, in Mondstadt, the proof of concept activities are over. So it can move towards commercialization stage. In small CO2 capture equipment, modular CO2 capture systems are to be introduced. And CO2 small size vessels, the equipment can be used on such vessel. And from 2023, we would like to start commercialization. And LCO carrier, in August, with a total engineering, we have started feasibility study. And also, last month, we issued a press release on a liquid CO2 carrier. And development activities should be completed around 2022, so that we will be able to move on to commercialization. And the timing for KONEX is almost the same. A distribution platform, proof of concept is now being done and we're proceeding with discussion with potential partners. So we believe that we can publish a release at an earlier stage for KONEX as well. And as a business model, we're working on technology provider and how we can handle CCUS as a business. First of all, with SUEZ, we are working on developing business model and we have concluded MOU for joint study. So as such, we would like to deal with CCUS Business. Well, thank you very much for your kind attention. 2,050 is a target year to achieve carbon neutrality and CCUS is essential to achieve carbon neutrality. So CCUS Technology is a technology that many companies are working on and we should expand the area of CCUS. MHI Group has developed broad portfolio and we would like to make a further contribution as a global lead.